What are auxiliary productions?
At manufacturing enterprises with a complex technological process structure, there are almost always workshops and divisions that perform functions that are assistive in relation to the main production cycle.
Examples include:
- own transport fleet;
- repair and commissioning department;
- energy management;
- workshop for the production of special equipment and tools.
All such divisions also produce products or provide services, but the main consumer of their products (services) is the enterprise itself. More precisely, they are needed to carry out the main production process of the enterprise.
A separate account 23 is intended for accounting for auxiliary production. Analytics on it is carried out by divisions of auxiliary production and types of costs. The specificity is that the account is also intended to account for the production process and cost calculation, so most of the item analytics that may be present on account 20 “Main production” will find their place on account 23 “Auxiliary production”.
Unlike accounting for main production (on account 20), the cost of production of auxiliary production formed on account 23 is not transferred to separate accounts intended for further accounting of finished main products (accounts 40, 43). The cost of auxiliary production is written off immediately to the credit of account 23.
For example, if one auxiliary division produces something for another auxiliary division, a posting is made Debit 23 Credit 23 for the subaccounts of the corresponding divisions.
Important! Some of the products of auxiliary production can be sold externally. In this case, the cost of sales is also reflected by posting Dt 90 (91) Kt 23, bypassing the accounts for accounting for finished products of the main production.
https://youtu.be/zuiOX5IUnDw
ACCOUNT 23 “AUXILIARY PRODUCTIONS”
Account 23 “Auxiliary production” is intended to summarize information on the costs of production that are auxiliary to the main production of the organization (clause 26 of the Instructions on the procedure for applying the standard chart of accounts for accounting, approved by Resolution of the Ministry of Finance of the Republic of Belarus dated June 29, 2011 No. 50 (hereinafter - Instruction No. 50); clause 36 of the Methodological recommendations for forecasting, accounting and calculating the cost of products (goods, works, services) in industrial organizations of the system of the Ministry of Industry of the Republic of Belarus, approved by order of the Ministry of Industry of the Republic of Belarus dated 06/05/2015 No. 273).
Every month, on account 23, the actual production cost of manufactured finished products, completed works and services is determined.
The actual cost of products produced by auxiliary production, work performed, services provided is reflected in the debit of accounts 20 “Main production”, 29 “Service production and facilities”, 43 “Finished products”, 90 “Income and expenses from current activities” and other accounts and credit account 23 (part five, clause 26 of Instruction No. 50).
Subaccounts for types of auxiliary production can be opened to account 23.
The balance of account 23 at the end of the reporting period shows the value of work in progress.
Analytical accounting for account 23 is carried out according to the types of products produced, work performed, services provided and (or) in another manner established by the accounting policy of the organization.
The correspondence of account 23 with other accounts is established in accordance with Appendix 19 to Instruction No. 50.
When determining the composition of costs reflected on account 23, one should be guided by the Instructions for accounting of income and expenses, approved by Resolution of the Ministry of Finance of the Republic of Belarus dated September 30, 2011 No. 102 (hereinafter referred to as Instruction No. 102).
| Accounting entries for account 23 | ||||
| No. | Contents of operation | Debit | Credit | Rationale |
| BY DEBIT OF ACCOUNT 23 | ||||
| 1 | The amount of accrued depreciation of fixed assets related to the costs of auxiliary production is reflected | Part four, paragraph 7 of Instruction No. 50; paragraph 2 sub-clause 4.2 clause 4 of Instruction No. 37/18/6 | ||
| 2 | The actual costs of container repairs are reflected | 23 | 02, , , , 76-2, etc. | Points , and 99 of Instruction No. 133 |
| 3 | The write-off of the residual value of intangible assets that do not meet the recognition conditions established by law is reflected | 23 | Appendices to Instruction No. 50 | |
| 4 | The amount of accrued amortization of intangible assets related to the costs of auxiliary production is reflected | 23 | Part three, paragraph 10 of Instruction No. 50; paragraph 2 sub-clause 4.2 clause 4 of Instruction No. 37/18/6 | |
| 5 | The cost of construction materials used in auxiliary production has been written off | 23 | Appendix 19 to Instruction No. 50 | |
| Construction materials were written off for the needs of auxiliary production; reflects the use of building materials for the construction of non-title temporary buildings and structures | 23 | 10 | Subclauses 14.10, 14.11 clause 4 of Instruction No. 4*** | |
| 6 | Reflects the cost of materials supplied to auxiliary production units | 23 | 10 | Part eighteen, clause 16 and part three, clause 26 of Instruction No. 50; clause 60 of Instruction No. 133 |
| 7 | The accumulated deviations of the actual cost of purchased materials from their cost at accounting prices are written off as expenses. | 23 | Part two, paragraph 20 of Instruction No. 50; clause 28 of Instruction No. 4 | |
| 8 | Reflects the inclusion of amounts of value added tax that are not subject to deduction in the costs of auxiliary production | 23 | Paragraph 2 p.5 of Instruction No. 41**** | |
| 9 | The cost of semi-finished products transferred for further processing was written off as auxiliary production costs. | 23 | Appendix 19 to Instruction No. 50 | |
| 10 | Reflects the mutual provision of services by auxiliary production to each other | 23 | Appendix 19 to Instruction No. 50 | |
| 11 | General production costs associated with the maintenance and management of structural units of auxiliary production are written off, if, in accordance with the accounting policy, such costs are not taken into account directly on account 23 | 23 | Part four, paragraph 26 of Instruction No. 50 | |
| 12 | The costs of correcting defects, as well as losses from irreparable defects in the absence of culprits, are written off as expenses for auxiliary production | 23 | Appendix 19 to Instruction No. 50 | |
| 13 | The release of finished products for the needs of auxiliary production is reflected | 23 | Appendix 19 to Instruction No. 50 | |
| 14 | The cost of work performed and services provided by suppliers (contractors) was written off as expenses of auxiliary production. | 23 | Part three, paragraph 26 of Instruction No. 50 | |
| 15 | Reflects the accrual of taxes, fees and other payments to the budget included in the costs of auxiliary production | 23 | Appendix 19 to Instruction No. 50 | |
| 16 | Reflects contributions to the Social Protection Fund of the Ministry of Labor and Social Protection of the Republic of Belarus (paid at the expense of the employer), accrued from the amounts of wages and other payments to employees, taken into account as part of the costs of auxiliary production | 23 | 69 | Part three, paragraph 26 of Instruction No. 50 |
| 17 | Accrued amounts of labor costs to be paid to employees of auxiliary production | 23 | 70 | Clause 4, part three, clause 26, part two, clause 55 of Instruction No. 50 |
| 18 | Amounts of funds spent by accountable persons are written off as expenses for auxiliary production | 23 | Appendix 19 to Instruction No. 50 | |
| 19 | Accrued to employees: compensation for the use of personal property for the needs of auxiliary production, rent for leased property | 23 | Part five, paragraph 9 of Instruction No. 102; Appendix 19 to Instruction No. 50 | |
| 20 | Deductions for compulsory insurance against industrial accidents and occupational diseases are accrued from the amounts of wages and other payments to employees taken into account as part of the costs of auxiliary production | 23 | 76-2 | Appendix 19 to Instruction No. 50 |
| 21 | The services of structural divisions allocated to separate balance sheets (parent organization) provided to auxiliary production of the parent organization (structural divisions allocated to separate balance sheets) are reflected. | 23 | Appendices to Instruction No. 50 | |
| 22 | Reflects the capitalization of surplus work in progress in auxiliary production based on inventory results | 23 | 90-7 | Paragraph 3 p.13 of Instruction No. 102 |
| 23 | Reflected as part of the costs of auxiliary production are the amounts of inventory shortages within the limits of natural loss norms identified during storage or sales | 23 | Part seven, paragraph 73 of Instruction No. 50 | |
| 24 | The amount of created reserves for upcoming payments is reflected | 23 | Appendices to Instruction No. 50 | |
| 25 | The write-off of a portion of deferred expenses for auxiliary production costs is reflected. | 23 | Part four, paragraph 76 of Instruction No. 50 | |
| BY ACCOUNT CREDIT 23 | ||||
| 1 | The services of auxiliary production for the delivery of equipment requiring installation are reflected | 07 | 23 | Appendix 19 to Instruction No. 50 |
| 2 | The cost of equipment for installation and building materials manufactured in auxiliary industries is reflected | 07 | 23 | Appendices to Instruction No. 50 |
| 3 | Actual costs for the creation of fixed assets and intangible assets were written off | 23 | Part three, paragraph 13 of Instruction No. 50 | |
| 4 | The receipt of construction materials manufactured in auxiliary production is reflected | 10 | 23 | Subclause 14.6 clause 14 of Instruction No. 4 |
| 5 | The transfer (delivery) of individual items as part of funds in circulation or materials of own production to the organization’s warehouses is reflected | 10 | 23 | Part seventeen, paragraph 16 of Instruction No. 50; pp., 106 Instructions No. 133 |
| 6 | Title buildings are capitalized by the contractor if the costs of their construction are reimbursed by the customer according to estimated standards | 10-8 | 23 | Clause 48 of Instruction No. 10***** |
| 7 | The increase in live weight of animals as a result of growing | 23 | Appendix 19 to Instruction No. 50 | |
| 8 | The offspring of young productive animals obtained from the main herd were registered | 11 | 23 | Appendix 19 to Instruction No. 50 |
| 9 | The actual cost of inventories received from auxiliary production is reflected | 23 | Appendices to Instruction No. 50 | |
| 10 | Reflects the costs of auxiliary production associated with the procurement and delivery of inventories | 15 | 23 | Appendices to Instruction No. 50 |
| 11 | Reflects the costs of auxiliary production associated with the procurement and delivery of inventories | 16 | 23 | Appendices to Instruction No. 50 |
| 12 | The difference between the cost of materials manufactured by auxiliary production and their cost at accounting prices is reflected | 16 | 23 | Appendices to Instruction No. 50 |
| 13 | Reflects the costs of warranty repairs and warranty service of products for which a warranty period is established, produced by auxiliary production | 23 | Part five, paragraph 9 of Instruction No. 102; Appendix 16 to Instruction No. 50 | |
| 14 | Part of the expenses recorded on account 23 was written off to the cost of main production in accordance with the distribution methodology adopted in the accounting policy | 20 | 23 | Part five, paragraph 26 of Instruction No. 50 |
| 15 | Semi-finished products of our own production, manufactured in auxiliary production, were capitalized | 21 | 23 | Appendices to Instruction No. 50 |
| 16 | General production costs are written off as the cost of products, works (services) of auxiliary production | 25 | 23 | Part three, paragraph 27 of Instruction No. 50 |
| 17 | The cost of products, works (services) of auxiliary production used for management and general economic purposes has been written off. | 23 | Appendices to Instruction No. 50 | |
| 18 | The write-off of the cost of products and work of auxiliary production recognized as defective is reflected | 28 | 23 | Appendices to Instruction No. 50 |
| 19 | The write-off of the cost of products and works (services) of auxiliary production used to correct defects is reflected | 28 | 23 | Appendix 19 to Instruction No. 50 |
| 20 | The write-off of the actual cost of manufactured products, works (services) of auxiliary production for the needs of service industries and farms is reflected | 23 | Part five, paragraph 26 of Instruction No. 50 | |
| 21 | The actual cost of finished products manufactured in auxiliary production is reflected | 43 | 23 | Part five, paragraph 26 of Instruction No. 50 |
| 22 | Costs (actual cost of manufactured products, works (services)) of auxiliary production related to the sale of products, goods (works, services) are written off. | 23 | Appendices to Instruction No. 50 | |
| 23 | The write-off of losses of auxiliary production due to insured events is reflected | 76-2 | 23 | Appendices to Instruction No. 50 |
| 24 | Calculations for claims for defects and downtime that arose due to the fault of suppliers or contractors are reflected. | 76-3 | 23 | Appendices to Instruction No. 50 |
| 25 | The costs of auxiliary production of the parent organization (structural divisions allocated to separate balance sheets) are reflected for products, works (services) performed (rendered) to structural divisions allocated to separate balance sheets (of the parent organization) | 79 | 23 | Appendices to Instruction No. 50 |
| 26 | The actual cost of sold work (services) performed (rendered) by auxiliary production was written off | 90 | 23 | Part five, paragraph 26 of Instruction No. 50 |
| 27 | The cost of gratuitously transferred work (services) performed (rendered) by auxiliary production is reflected | 90-10 | 23 | Paragraph 4 p.13 of Instruction No. 102 |
| 28 | Expenses for canceled production orders for auxiliary production were written off | 90-10 | 23 | Paragraph 11 p.13 of Instruction No. 102 |
| 29 | Write-off of costs of auxiliary production caused by emergency situations is reflected | 90-10 | 23 | Paragraph 19 p.13 of Instruction No. 102 |
| 30 | The shortage and (or) damage to work in progress in auxiliary production is reflected | 94 | 23 | Appendices to Instruction No. 50 |
| 31 | Expenses and payments for auxiliary production were made using reserves for upcoming payments | 96 | 23 | Appendices to Instruction No. 50 |
* Instructions on the procedure for calculating depreciation of fixed assets and intangible assets, approved by Resolution of the Ministry of Economy of the Republic of Belarus, the Ministry of Finance of the Republic of Belarus and the Ministry of Architecture and Construction of the Republic of Belarus dated February 27, 2009 No. 37/18/6 (hereinafter referred to as Instruction No. 37/18/6 ).
** Instructions for accounting of inventories, approved by Decree of the Ministry of Finance of the Republic of Belarus dated November 12, 2010 No. 133 (hereinafter referred to as Instruction No. 133).
*** Instructions on the accounting procedure for construction materials, approved by Decree of the Ministry of Architecture and Construction of the Republic of Belarus dated January 24, 2008 No. 4 (hereinafter referred to as Instruction No. 4).
**** Instructions for accounting for value added tax, approved by Resolution of the Ministry of Finance of the Republic of Belarus dated June 30, 2012 No. 41 (hereinafter referred to as Instruction No. 41).
***** Instructions on the procedure for forming the cost of a construction project in accounting, approved by Resolution of the Ministry of Architecture and Construction of the Republic of Belarus dated May 14, 2007 No. 10 (hereinafter referred to as Instruction No. 10).
21.12.2015
Margarita Zgirovskaya, auditor, DipIAS ICFM, editor of the analytical legal system "Business-Info"
Posting Debit 23 Credit 23
Posting Debit 23 Credit 23 is most often used in situations where one auxiliary unit transfers its products or provides services to another auxiliary unit. Thus, the entry Debit 23 Credit 23 is made in the context of analytics for various auxiliary productions.
Example
The flour mill has:
- own fleet of special vehicles;
- own sorting and loading shop for finished products;
- workshop for the production of equipment and tools;
- repair shop.
According to the accounting regulations of the enterprise, the inventory used in the main production and repair work are accounted for on account 20, and the costs of loading and delivering finished products to customers using their own transport are accounted for on account 44 “Sales expenses”.
1. The repair shop performed work on repairing the equipment of the loading shop in the amount of 100,000 rubles. In this case, equipment and tools from our own workshop were used in the amount of 20,000 rubles.
2. The repair shop also repaired the elevator equipment in the amount of RUB 500,000. In this case, the products of our own inventory and tool shop were used for 130,000 rubles.
In order to correctly distribute the amounts that form the actual value of the main production on account 20, sales expenses on account 44, as well as the balance of accounts of auxiliary production, it is necessary to make transactions of the type Debit 23 Credit 23 :
- Dt 23 (repair shop) Kt 23 (equipment and tools workshop) - 150,000 rubles. (20,000 + 130,000). The workshop's products were transferred to the repair shop.
- Dt 23 (loading shop) Kt 23 (repair shop) - 100,000 rubles. Repairs were carried out in the loading shop using our own repair shop.
- Dt 20 Kt 23 (repair shop) - 500,000 rubles. Current repairs of main production equipment were carried out using our own repair shop.
- Dt 44 Kt 23 (loading shop) - 100,000 rubles. The cost of routine repairs of equipment in the loading department is included in sales expenses.
In addition, the entry Debit 23 Credit 23 can be used to adjust data on the nomenclature and reflect the identified misgrading.
Example (continued)
Let's introduce additional conditions.
On the last day of the month, an inventory was taken in the equipment and tools workshop. The results revealed:
- excess items related to inventory - 4,000 rubles;
- shortage of nomenclature related to tools - 4,000 rubles.
The study of documents for internal movement showed that when releasing the production of the workshop to the repair shop, errors were made: the item items of inventory and tools worth 4,000 rubles were reflected with re-grading.
To eliminate inaccuracies, the accounting department will make a posting in the format Debit 23 Credit 23 by item: Dt 23 (tools) Kt 23 (inventory) - 4,000 rubles.
Typical debit entries
Debit | Credit | Operation |
| 23-00 | 02-00 | Depreciation was calculated on fixed assets used in auxiliary production |
| 23-00 | 04-00 | Depreciation was calculated on intangible assets used in auxiliary production (without using account 05) |
| 23-00 | 05-00 | Depreciation was calculated on intangible assets used in auxiliary production |
| 23-00 | 07-00 | Equipment that is not subject to accounting as part of fixed assets is used for the needs of auxiliary production |
| 23-00 | 10-00 | Materials were used for auxiliary production needs |
| 23-00 | 11-00 | The cost of slaughtered animals is written off as main production costs |
| 23-00 | 16-00 | The amount of deviations in the cost of inventories transferred to auxiliary production is written off (using account 15) |
| 23-00 | 19-00 | VAT on works (services), not reimbursed from the budget, is included in the costs of auxiliary production |
| 23-00 | 21-00 | Semi-finished products were transferred for the needs of auxiliary production |
| 23-00 | 23-00 | Mutual services of auxiliary productions are reflected |
| 23-00 | 25-00 | The share of overhead costs is included in the costs of auxiliary production |
| 23-00 | 26-00 | The share of general operating expenses is included in the costs of auxiliary production |
| 23-00 | 28-00 | Losses from defects are included in the costs of auxiliary production |
| 23-00 | 40-00 | Finished products are transferred for the needs of auxiliary production (using account 40) |
| 23-00 | 43-00 | Finished products were transferred for the needs of auxiliary production |
| 23-00 | 60-00 | The cost of work (services) performed by contractors is included in the costs of auxiliary production |
| 23-00 | 68-00 | The amounts of accrued taxes and fees are taken into account in the costs of auxiliary production |
| 23-00 | 69-01 | A unified social tax has been accrued, in the part payable to the social insurance fund, from the wages of workers engaged in auxiliary production |
| 23-00 | 69-02 | A single social tax has been accrued in the part payable to the pension fund from the wages of workers employed in auxiliary production |
| 23-00 | 69-03 | A single social tax has been assessed in the part payable to the compulsory health insurance fund on the wages of workers engaged in auxiliary production |
| 23-00 | 70-00 | Wages accrued to employees engaged in auxiliary production |
| 23-00 | 71-00 | Expenses for the needs of auxiliary production were paid to accountable persons |
| 23-00 | 76-01 | Insurance payments are included in the costs of auxiliary production |
| 23-00 | 76-02 | A claim previously made to contractors for defects and downtime caused by them, which is not subject to recovery, is taken into account in the costs of auxiliary production |
| 23-00 | 79-01 | The branch, allocated to a separate balance sheet, received an auxiliary production facility from the head office of the organization (in the branch’s accounting) |
| 23-00 | 79-01 | The head office of the organization received from the branch allocated to a separate balance an object of auxiliary production (in the accounting of the head office of the organization |
| 23-00 | 80-00 | Part of the costs of auxiliary production paid by a participant in a simple partnership is counted towards the contribution to the joint activity (on a separate balance sheet of the joint activity) |
| 23-00 | 94-00 | Shortages and losses from damage to valuables within the limits of natural loss rates are taken into account as part of the costs of auxiliary production |
| 23-00 | 96-00 | The accrued amount of the reserve for future expenses is included in the costs of auxiliary production |
| 23-00 | 97-00 | Deferred expenses related to the current period are included in auxiliary production costs |
| Top of page |
Wiring Dt 20 Kt 23
As can be seen from the example, by adding the posting Dt 23 Kt 23 to the postings Dt 20 Kt 23, we reflected the transfer of the results of the auxiliary production to the main production process. This transfer is the main purpose of any auxiliary production. Accordingly, Dt 20 Kt 23 is the main entry, including the cost generated in auxiliary production in the cost of the main product of the enterprise.
Learn more about the formation of turnover and balance on account 20 from the article “Main production in the balance sheet (nuances)”.
Meaning of 23 accounts
Position 23 in the Chart of Accounts, known as “Auxiliary Production”, is intended to summarize information about the costs of departments that are considered non-core.
If we consider in more detail, it should be said that this account is used to reflect the expenses of those departments that provide:
- transport service;
- OS repair work;
- production of spare parts, tools, building structures;
- construction of temporary structures;
- canning, salting or drying agricultural products.
The debit part of the account should reflect direct costs that are directly related to the production of products, as well as indirect costs that occur due to the need to manage and maintain the work of auxiliary structures, as well as losses due to defects.
In the credit part of the invoice it is necessary to show the actual cost of the finished product. All these amounts should be written off to the debit side of such accounts as main production (20), sales (90), and release of goods (40).
Wiring Dt 20 Kt 10 and Dt 23 Kt 10
Accounting entries Dt 20 Kt 10 and Debit 23 Credit 10 reflect the transfer of materials from warehouse to production. If account 20 is debited, it means that the materials are transferred to the main production process; if account 23 is debited, the materials are sent to auxiliary production.
Example (continued)
Based on the results of the inventory of the equipment workshop, a shortage of fuel and lubricants stored in the same workshop was also identified by 1,000 rubles.
It was found that, along with equipment for repairing the loading workshop, a container with lubricant for the transport department worth 1,000 rubles was taken away, without properly reflecting this in the documents for internal movement. The container was found in the transport department.
To reflect the movement of a container with fuels and lubricants, after correct execution of documents for the movement, you can make a posting: Dt 23 (transport department) Kt 10 (inventory and tools / fuels and lubricants workshop) - materials were transferred from one auxiliary production to another.
Pay attention to the structure of analytics for account 10 given in the example - in the context of both storage location and nomenclature (names).
You can read in detail about the special requirements for accounting on account 10 in the article “Features of the balance sheet on account 10.”
What is reflected in the cost account 23
The debit of accounting account 23 reflects:
direct costs - in correspondence with the credit of the accounts on which these costs are formed (for example, the cost of materials, the salary of employees in ancillary production, mandatory insurance contributions accrued to it, etc.);
costs for managing ancillary production related to indirect costs - in correspondence with the credit of accounts reflecting general business or overhead costs;
losses in the form of defects in correspondence with the credit of account 28.
The credit of accounting account 23 reflects the write-off of auxiliary production costs as the cost of its products, services performed or work performed. And the balance at the end of the month in account 23 reflects the value of work in progress in the subsidiary department.
Results
Postings in the format Debit 23 Credit 23 can be used to:
- reflect the transfer of products (services) of one auxiliary production to another auxiliary production;
- make adjustments in terms of the nomenclature of auxiliary production, for example, when identifying mis-grading.
The main posting for disposal from account 23 is Dt 20 Kt 23 - when the product of auxiliary production is sent to the main one.
You can find more complete information on the topic in ConsultantPlus. Full and free access to the system for 2 days.
